Elanco Animal Health has entered into a definitive agreement to acquire Bayer’s Animal Health business. The transaction is valued at $7.6 billion consisting of $5.3 billion in cash, subject to customary purchase price adjustments, and $2.3 billion in Elanco stock. This comes after Bayer has sought to reduce cost due to recent litigation troubles over glyphosate.
The divestment is expected to be concluded in mid-2020 subject to the satisfaction of customary closing conditions, including antitrust clearance. Bayer intends to exit its stake in Elanco over time.
“This transaction enhances our focus as a global leader in life sciences,” said Werner Baumann, Chairman of the Board of Management of Bayer AG. The exit of the Animal Health business marks the largest transaction in the series of portfolio measures initiated by Bayer in November 2018. The company had previously announced the divestiture of its Consumer Health brands Coppertone and Dr. Scholl’s along with the sale of its 60-percent stake in German site services provider Currenta. “We are therefore delivering ahead of schedule on one of the key priorities for driving value creation that we communicated at our Capital Markets Day in December 2018”, said Baumann.
The combination is highly complementary and creates the number two animal health company, with top three positions across a broad range of species and geographies. It also enhances Elanco Animal Health’s portfolio of leading global brands and bolsters its innovation capabilities and R&D pipeline.
Bayer’s Animal Health business is a global leader in the segment with sales of $1.8 billion in fiscal 2018. It develops and markets innovative products and solutions to prevent and treat diseases in companion and farm animals. The Advantage family of flea, tick and worm control products, for instance, has been among the most successful products on the market for years.
“We would like to thank all our Animal Health employees for the commitment they have shown over the years and for the success this has brought to Bayer and to our Animal Health business. We were also able to safeguard the interests of our employees,” said Baumann. Under the agreement with Elanco, all Bayer Animal Health employees will have at least one year of employment protection against unilateral termination with similar and no less favorable benefits in the aggregate.